Continuing this post, about inequality in the ability to pay, inequality in the willingness to pay is similar.
To the extent there are economies of scale, the less difference there is between consumers' tastes and preferences, the higher real income will be, because then they can be made on a larger scale. The more difference there is in what people want, the more different things there are that have to be made if people are going to get them. As an example, that we come in different shapes and sizes and styles is clearly inconvenient when it comes to making clothes for people.
This is particularly interesting to me as it cuts across income inequality. Just as it's inconvenient that people come in non-standardized proportions, the same that they come in rich and poor. But that's less true than would appear if you just looked at income inequality.
In America there's this idea of the "middle class", and it's not just about income. Pretty much everybody describes themselves as middle class in this country, which, considering there is an awful lot of real inequality, means there's a lot of people who could describe themselves as rich or poor but choose not to. In America, you're supposed to be middleish.
And people act like it too. There's a real tendency to act middle class, and that includes consumption patterns. The most common car brand of the wealthy is Ford. This all serves America well. That there's a stigma against conspicuous consumption isn't just good in that it is inherently anti-social, but that inconspicuous consumption inherently is.
If we assume that there is some fixed cost in the production of a product, like the development of an automobile, then the less differentiation there is in the cars that people drive the more that fixed cost can be shared across consumers. When that cuts across income, that means that the consumption of the rich subsidizes that of the less well off. The same the other way around. Likewise, the poor would be less tolerable of the well-being of the rich. Our middleness benefits everyone.
This middleness makes the case for reducing poverty as something that benefits all Americans. If the rich and poor are going to drive the same cars, the rich can't share the cost of their ride by assuring the poor can afford it as well. If consumption is instead segregated by class, if it was an economy where the rich would never deign to consume what the poor do, the rich have less of an interest in the well-being of the poor. Middleness means we should benefit everyone.
It's common for people to look at America as a country of crass materialism and over-consumption. Rather than quality, we consume in quantity. Americans, as is often noted, don't have any taste. But that's what I'm talking about, we all equally don't have any taste. Discerning consumption is less social consumption. If the rich not only don't buy completely different higher-quality products than the poor, but instead buy twice as much of everything, that's twice as good.
I'm not saying that diversity isn't valuable, in consumption as well as production. The desire for something different is ingenuity, and that's good for society on the whole as well (maybe more on that later). But I think it's important to note that America is a country that has turned dull, bourgeois materialism and uniformity into a common good. It is one of the reason's for American prosperity. And it would be a shame if that was ever lost.
This, of course, works the opposite direction if there are diseconomies of scale. This is particularly true of things that require natural resources or land, where there is an in-elasticity of supply. There is only so much land, if that's what you're trying to buy you're better off if others aren't. Thankfully, in our modern economy, where GDP growth isn't just possible but the default, this is comparatively uncommon.
